Are we in the midst of a lost decade? Five years ago I caused some controversy when, in an interview with the Guardian, I said the downturn would be more profound and long-lasting than people expected. That's why I was prepared to use the spending power of government to support our economy to get growth going. Once that was established, we could get borrowing and debt down.

No wonder then that borrowing reduction is wildly off course. The chancellor is borrowing £245bn more than he planned in 2010. And he is borrowing more this year than last. As the OBR says, the figure is flattered by some sleights of hand involving the Royal Mail's pension fund and revenues from quantitative easing.

The government is also hopelessly off course in meeting its debt reduction target: one of its central objectives. Borrowing, and therefore debt, will increase further if the government doesn't hit an assumed growth target of 2.8% in 2017. It's difficult to see what justification there is for that optimistic assumption.

On Wednesday George Osborne said that his plan was taking longer than anyone hoped. Unfortunately, he is right on that. He is missing all of his targets. Many of his problems stem from a straitjacket of his own stitching. He has denied the need for a Plan B, which might include spending more on infrastructure, for example. He said he couldn't afford to spend more. But he has had to. Wouldn't it be better to borrow for a purpose rather than to pay for economic failure?

Britain's problem is lack of growth. Austerity has made it worse. It was this that caused the credit downrating. A credible plan for growth would generate the revenues to bring down borrowing, then debt. This government is already borrowing more because of rising debt charges and – as the OBR says – tax receipts falling as a result of our weaker economic performance.

The OBR has pointed out that living standards will continue to be squeezed until 2015, again reducing demand in the economy. The lack of demand will erode confidence further. It is true that the eurozone continues as a major block to recovery. If the crazy decision on Cyprus is anything to go by, it may be years before the eurozone accepts that it must clean up its banks, and that its austerity programme risks not just recession but depression.

We should not compound that risk here. The government could have done much more on infrastructure improvement. Its housing plan looks interesting but does not even begin until next year. If more houses are not built, the risk is we create another housing bubble. The bedroom tax has exposed the glaring shortfall in social housing. Where were proposals to deal with that? Is it still an ideological problem for the Tories?

But unless we can instil confidence that the economy is on the road to recovery, none of this will be enough. It is now five years since this downturn began. It is increasingly clear that in five years' time we will be lucky to be experiencing anything like a recovery.

We are now more than halfway through this parliament. Wednesday was not the day to put forward Labour's plans. But we know that watching a government fail is not enough. The opposition must offer a compelling and credible alternative approach.

Three years on this government seems reduced to hoping something will turn up. Government can make a difference. The Bank of England can do its bit. But unless the government uses its spending power, then the chances of us escaping a lost decade are remote.